Warren has long believed that improved disclosure for retail products was a win-win for consumers and financial services firms. I saw her speak in March 2010 and she mentioned how a standard credit card agreement in 1980 fit on one piece of paper. Today, with all the various riders, they come in at 30 pages. While greater clarity is obviously beneficial to the borrower, it also saves the banks’ costs.

However, this opening of the door by Cordray does not look as likely to produce such happy outcomes. Maybe this is a means for the CFPB to force lobbyists to provide their input in a format that makes it easier for CFPB to process. But I can’t imagine the Cordray or Raj Date would say to the American Bankers Association: “We are trying to create a level playing field, so we won’t meet with you. Put it in writing and we’ll give it due consideration.”

So if this portal is a supplemental channel, who exactly is it intended to serve? The dropdown menu on the “Tell Us About Yourself” page tells us who it expects to comment: people from organizations, specifically:

Financial services provider
Trade association
Government agency
Community organization
Other

In other words, it does not contemplate that consumers have the expertise or motivation to provide input. Citizens are probably assumed to be represented via the CFPB itself or perhaps also by consumer groups, but even then, they may have specific axes to grind (think the AARP). I wonder how it would react to suggestions from an Occupy group, say an Occupy the CFPB that could match the caliber of work done by Occupy the SEC.

What troubles me about this anodyne-looking portal is that it looks like an invitation to members of the banking industry to declare war on existing regulations via the ruse of “streamlining.” Shouldn’t the CFPB be setting the agenda on what regulations it thinks are in the biggest need of review, and actively solicit input on them, rather than put itself in the position of needing to respond to whatever topics banks and lobbyists choose to make noise about?

The premise is that simplifying regulations is always a boon when that is not necessarily the case. When businesses started pushing for deregulation and simplification of regulations in the Carter Administration, there was no proof that regulations were hampering competitiveness. From ECONNED:

Indeed, the boosters of a new hands-off posture toward business were never able to prove a decline in innovation, much less that regulation was responsible. In fact, the supposed problem was (in a remarkable bout of candor) frequently characterized as a “perceived lag.” However, the science advisor to the White House, Dr. Frank Press, had been co-opted despite the lack of real evidence and backed the corporate agenda.

The logic used here was repeated again and again in subsequent pushes for deregulation: the superior wisdom of the self-regulating market and how other approaches compromised freedom; the redefinition of progress from social and collective benefits to the process of “innovation,” irrespective of whether the results actually were positive. Another disturbing thread in this new line of thinking was an assault on democracy as the enemy of efficiency, order, and rationality, and the invocation of the superior judgment of experts.

As these initial efforts bore fruit, the big businesses backing the deregulation effort became emboldened and made more demands. They began to characterize government action as “interference,” implying businesses had an absolute right to unfettered operation, and argued for lowered expectations on behalf of the public.56 If corporations did indeed become more prosperous thanks to newly-won freedom, it would have been reasonable for the gains to be shared, particularly since some of the changes sought (lowered pollution standards, less stringent product quality regulation) imposed costs on the public at large. But the corporations wanted to have their cake and eat it too: fewer restrictions on their activities, and less collective participation in the upside.

Perhaps this portal is meant to serve a benign purpose, such as to lower the cost to small banks and community groups to register their views with the CFPB. But it looks as if the agency is embracing priorities that favor the banking industry rather than the consumers that it is nominally designed to serve.

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61 comments

Warren has long believed that improved disclosure for retail products was a win-win for consumers and financial services firms.

Warren’s not becoming the permanent director of the Consumer Protection Agency was a major defeat for the Obama Administration – one he should not have let happen.

America’s consumer protection laws may exist but they are not being enforced. For instance, had the Truth In Lending Act (of 1968) been properly enforced by a Consumer Protection Agency it is entirely possible that we could have avoided the SubPrime Mess and its consequence, the Great Recession of 2008/9. The Fed, normally who have operational oversight of bank operations, let this one slip through the cracks.

In our hell-bent rush to relax “Free Enterprise” from so-called “abnormal restraints”, we committed a very serious error – one for which many of us are still paying the damages today.

The Rabid Right, knee-jerking at the altar of Mammon, wanted unhindered latitude for companies to make profits. But at who’s expense? Far too often, it has been at the expense of the Consumer.

Many of our markets are being consolidated into quasi-oligopolies allowing the select few who participate to implement what economists call “sticky pricing” – meaning that insufficient competition cannot have any great influence on market prices as it should. Sticky-pricing enhances corporate profits and is most renowned in such markets as Telecoms.

I will be supporting Warren’s bid as Massachusetts Senator (to replace Replicant Scott Brown who took Ted Kennedy’s seat) in November. We need more women of her caliber in Congress.

And I do mean “women”, the male variety of the politico-breed having demonstrated amply enough how pusillanimous they can be when elected as a representative to either chamber of Congress. They’ve sold their souls to the God of Mammon.

Dear Lafayette;
May I suggest that the Bankster class is equal opportunity?
I feel they are indeed past the “She’s a girl” phase. “B—-r the consumer” works for all ages and genders. As for females in politics, aren’t women still paid less than men for the same work here in the West? Isn’t that an incentive for the bankster class to encourage more women in politics as a way to lower the banksters ‘managerial overhead?’
Just some thoughts.

First, take the Harvard Implicit Bias test, then we might have a talk. It shows how deep seated stereotyping is. Even after knowing how the test works one’s results remain the same upon retaking the test. For instance, Malcolm Gladwell who is half black, was distressed to see that he scored as biased against blacks even when he took the test repeatedly (I think he said every morning for a protracted period).

Oh, I see Harvard now changed the name of the test from “implicit bias” to “implicit association.” Can’t say people are biased, now can we?

Second, read this article which described how people who can think they are enlightened about hiring out groups often aren’t. I’ve been told that some HR people at big companies say this is the best single article on bias in the workplace they have ever read.

Maam;
I downloaded the article, it has relevance to my present precarious working environment.
I also visited the Harvard site and took the gender test. (I am chastened to report that I scored strongly ‘associational’ for males and careers and females and home. Can’t say that I am ‘biased’ now, can we?) The methodology used is very cunning. I was impressed with the site. I have signed up to do more of the tests in the future. Thank you for this link.
ambrit

I feel compelled to veer OT to report on some research inspired by your link to a ranking by percentage of women in national legislatures. The two nations with the highest number of Muslims, Indonesia and Pakistan, both rank higher than the USA. Of the next two, India and Bangladesh, India ranks lower and Bangladesh ranks higher than USA. Saudi Arabia and Yemen rank at the bottom of the list, with no women in the legislature of Saudi Arabia, and one woman among 301 in Yemen’s lower house, and 2 women among 111 members of their upper house. Muslim population as a percentage of total population in Indonesia, Pakistan, and Bangladesh are 88.1%, 96.4%, and 90.4% respectively. In Saudi Arabia and Yemen, Muslims constitute 97.1% and 99% respectively.

Speaking only for myself, there seems to be a common perception that Islam is inherently repressive of women. But in these nations where the vast majority of the populations are followers of Islam, it appears that representation in the national legislature does not break along religious lines. It would appear to be cultural. In any case, women in Indonesia and Pakistan hold a slightly higher percentage of seats in their national legislatures compared to the USA.

Women or men, makes no difference. Representatives as well as Senators must represent the people who elected them, not any organized group. Call these groups “special interest” or whatever they should come to understand what is best for the public.

Women or men, makes no difference. Representatives as well as Senators must represent the people who elected them, not any organized group.

You’ve missed the point. It does make a difference.

It is a matter of perspective and psychology that are both remarkably different between the male and female of our species. (Of course, when those differing viewpoints are shared and debated, the product is usually highly beneficial to all groups. But that is a different subject.)

So, de facto, yes, the guys look after the guys and the girls can take a walk. Do crafts. Chit-chat. Whatever.

Why are the prisons bursting with men? Because they are more prone to risk taking than women? Or because males are less prone to honesty than females? (From WikiP: “The male incarceration rate is roughly 15 times the female incarceration rate” See here.)

So, would you say there’s no difference in the male and female of our species as regards a key attribute (honesty) for public office?

Obama appointed Harvard Law professor Elizabeth Warren last year as an administration advisor to help set up the bureau. But he did not nominate the outspoken consumer advocate as director because of concerns that Senate Republicans would block her confirmation.

@Lafayette: “In our hell-bent rush to relax “Free Enterprise” from so-called “abnormal restraints”, we committed a very serious error – one for which many of us are still paying the damages today.

Correction: We are ALL paying the damages and will continue to do so for the foreseeable future. And the damage has been not just to our net worth(s), our economic prospects, and our social welfare, but to the very idea that we have some democratic control over the future of our country.

These are profound damages, and I am very grateful to Yves Smith and her faithful commenters for educating us about them every day. Thank you.

… but to the very idea that we have some democratic control over the future of our country.

Good comment in general and I concur. But I must differ with you as regards the above bit.

We do have responsibility over the future of our country. It is in the voting booth that such happens. But what can we do when our sense of civic duty does not seem to include that of voting?

Look at the voter turnout record of our country on this comparative list here. You have to scroll down to the bottom to find the US.

In the last election – the one where the Koch Bros. funded the T-Party (T for Troglodyte) into control of the HofR – only 48% of American voters bothered to show up. They have since stonewalled each and every occasion for the Administration to tackle some very serious national problems. (OK, so we blame Obama for not being sufficiently kick-ass. But is that really the truth?)

So, here we are, all bitching-in-a-blog our indignation – which may be necessary as catharsis but is never sufficient for meaningful change. We, as a nation, have become politically apathetic – which was the ideal condition for the Right to walk in, neuter market regulatory oversight, get us into foreign wars and bring higher marginal and capital gains income taxes crashing to the ground.

The consequence of which is one of the worst records of Income Disparity in the developed world.

And the Right did it all in broad daylight with the approbation of American voters. (After all, we elected lead-head not once, but twice as PotUS, didn’t we?)

Any national reformation must start at the ballot box by the voters. We get rid of this Millionaire’s Club of Congressionals and put in some Progressives. Lots of progressives.

“Regulation” is just another venue for Graft and Bribery. This is the one of the chief sources of power for the tyrannical State of Oligarchical Collectivism.

You have not figured that out yet?

For an “organization” as corrupt as the Democrat Party, this is just common practice, and yet the fools hereabouts think that the Left is going to “protect” them from those “evil business people”. Nothing could be farther from the truth. You just wait, the tyranny is just beginning.

The “consumer”–read citizen–needs “protection” from the Socialist elitists that hatch up such devilish schemes as this “board”. They are nothing but shakedown artists. This is nothing more than a protection racket.

You “useful idiots” are going to get you wish. You will not like it very much at all when it comes. It will not be the world that you imagined it to be. No, not at all.

If you want to see the future of America go to Mexico, Brazil and Venezuela. It will be a corrupt and narrow social pyramid with vipers at the top who are only competent at grasping power.

Remember that you cheered them on as they finally overturned the Republic. Remember that you abjured their enemies and victims. Remember that it was you how defamed the productive and responsible in you blind collectivism.

I doubt though that you will have the decency to even admit your culpability.

Best learn to grovel before your masters.

(And Warren would have been even worse, if that is possible. How comic that you think Warren has any productive competencies at all, that this is about “gender”, and how absolutely regressive that you thing that genitalia imparts some sort of integrity or wisdom. It is positively Victorian. Warren is not even at the level of clowns like Babs Boxer or Hilary. Warren is a apparatchik of the Democrat’s Nomenklatura, academic wing, and a particularly unhinged one. She has not produced so much as one nickle of wealth in her life. She is an arrogant, pseudo-intellectual parasite of the worst sort–the sort that can be found at Harvard. She cares not one whit for this nation, its people or its “consumers”. What fools you all are to hold otherwise.)

Speaking of “unhinged.” Is the type of “tyranny” to which you refer the tyranny of having mortgage disclosure forms in one document instead of two? Do you consider fraudulent underwriting to be the socially valuable work of the “productive and responsible”? Have fun in Galt’s Gulch.

Mr. nice try;
By Socialism I’m assuming you’re referring to the strategy of “Socializing the risks and Privitizing the benefits” that underpins the Bankster Putsch. I prefer the old fashioned “Peoples” style Socialism. See you in the streets Comrade.

…love to be called “socialist” by those defending American
corporate interests manufacturing on the basis of child labor, conscripted labor, monopoly, jailing of unionizers, operating in COMMUNIST CHINA..

“In their Overview of the Proposed Rule, the Agencies request comment on the potential impacts the proposed approach may have on banking entities and the businesses in which they engage, but curiously fail to solicit comment on the potential impact on consumers, depositors, or taxpayers

The Administrative Procedure Act requires that, prior to the enactment of a substantive regulation, an agency must give ‘interested persons’ an opportunity to comment.
The Agencies seem to have lost sight of the fact that ‘interested persons’ could include human beings, and not just banking corporations.”

The CFPB should take note.

If the CFPB needs any indication that folks are listening and counting on them, over 15,000 letters from individuals were submitted demanding a strong interpretation of the Volcker rule. This was a record breaking response. Public interest groups including AFR and Public citizen led the letter writing campaign.

With all that public mail coming in, the CFPB can save a fortune on toilet paper. That’s about all citizen letters to gomint agencies are used for. The SEC has always had one guy whose job it is to open those letters and shred them.

I am going with benign and better accessibility.
I see this as more of a suggestion box for the “unlobbied”.
My industry awaits the CFPB’s proposed definition for larger participant in the non bank sector before guaging the supervisory impact the CFPB will have on consumer debt relief services.
I will certainly use the portal to comment. I can think of many others who will as well.

Mr. Strether;
Too true. My good friend and alter ego ‘Mr. Snark’ is quite dissatisfied with the paltry offers he is getting for the lease of his ‘Consumerhood.’
PS. Is it just me, or is there an increase in Trolling on this blog recently?

Perhaps there is a correlation with Yves’ increasing exposure to a wider audience. Upside: more people will begin to understand what’s really going on. Downside: increasing communications from parallel universes and alternate realities. (No offense intended.)

Liz Warren could’ve, should’ve been more than just running for office. I don’t buy the clarity of paperwork cop out. If a Predator has decided damaging a consumer is good business, they’ll clearly explain how they are going to do it, in fewer pages. People will (based on their drive for basic needs, and shelter is a basic need) sign anyway. This is abhorrent.
The predator needs to be strapped down, prevented from using information technology to harm, must be legally prevented from loansharking. Every step of the game must see more regulation and control all the way down to the realtors who must bear much more responsibility.

As for Warren, when she supports criminal prosecution of bankster CEOs for accounting control fraud, I’ll take her seriously. Meanwhile, she’s just staking down the left side of the Overton Window for 2016.

Actually, I think the Overton Window is widening at both ends right now. The mainstream is going more and more right, verging on Clang Bird territory. That rightward shift includes all the “progressives” running interference for Obama, of course. But the bounds of acceptable discourse defined by the Overton Window are opening to the left, too: “Income Inequality.” Occupy successfully seized the right moment to bring that set of talking points before the public. The Overton Window is rather like taffy right now….

Mr. Strether;
Yes! I can see it! “Overtons’ Window” by Salvador Dali! Thank you Mr. Strether for a wonderful ‘thought experiment.’
Now to have a try at that Harvard Association test Mz Smith told me to take. I’m sort of nervous, cause I think I’m not going to turn at all like what my self image is.

Further, a brutal arrogance exists with payday lending. Desperation drives their profit. Can we admit this?
Politically correct violence suggests we should train the ghetto folks to gain a better understanding of finance. This only serves to harm victims further. Hunger and 300% interest are a bonanza, just ask any Bankster.

YS: But it looks as if the agency is embracing priorities that favor the banking industry rather than the consumers that it is nominally designed to serve.

Maybe, but let’s give a chance and see what happens.

So far, there has been no real noise from the agency. Thus one wonders what they are up to – and streamlining a two-page document into one page means very little, as long as the document is entered as a valid registration. Further information can always be asked, once past the fact that people are not frightened away by a document too complicated to fill out.

In fact, if the agency really did not want anyone to submit the document they would have conceived it as a full-blown 5 page document (in 10-point font-size) to be submitted in triplicate.

It’s better that the Bureau of Consumer Protection be up and visible. Now it needs teeth. For instance, to find out why no one has been sought for breach of the Truth In Lending Act (of 1968) that was supposed to clarify the mess of mortgage contracting. And then bring the SOBs to justice.

Is that too much to ask in a land of laws? Maybe, given the lack of enthusiasm by government officials demonstrated so far.

And yes, we must do something about the lack of market oversight in the pell-mell manner the US has consolidated some markets into quasi-oligopolies, with their tendency for “price stickiness” due to a patent lack of sufficient competition.

POST SCRIPTUM

Microsoft had its first condemnation for “abuse of market dominance” overturned by an appellate court in the US. But it paid a fine in Europe for having been found guilty of exactly the same transgression.

First a country needs laws, then it needs effective market oversight legal-eagles and finally it must have unbiased courts.

One of my brothers sits on one advisory board of Microsoft-I bet him it was Microsoft’s policy of NOT contributing to political parties that was the real intention…AND I bet him Microsoft would be found “guilty”, and would soon be contributing to both parties…

Dear b.;
Instead, the Johnson administration came over to MLKs’ way of thinking. Now that was politics at its best here in the old USA. This modern clutch of politicians? The old timers would have laughed them out of the Rotunda.

IT was the Kennedy administration who shoved a non-violent MLK to the forefront of march on Washington…and national prominence. More interesting was later coming together of Malcolm and Martin, over issues of war and poverty…remember just prior to Malcolm’s assassination, he was disallowed to join African leaders in France (not allowed INTO France), whom he had met with prior, in attempt to bring plight of “poor” worldwide, before United Nations…

This is an industry badly in need of re-regulation. I doubt if document simplification is going to solve very many of its problems. In fact, no matter how simple documentation becomes, the most vulnerable people are often functionally illiterate, and financially illiterate, too.

I have a question for Yves–I know it belongs on another thread, but the most appropriate one is yesterday’s, and no one is likely even to see it there.

On REOs–there has been a lot of speculation that broken chains of title cloud many REO properties (and that banks themselves refuse to accept liability). What about judicial foreclosure states? Does a judicial foreclosure remove all clouds from a title?

Also, and even darker–doesn’t the same logic apply to any property with a mortgage that has been sold to a pool through MERS? Can it be that there are virtually no properties that can claim clear title? As a potential buyer, I long to return from 20 years overseas to California (or perhaps to Hawaii–leading to my judicial-nonjudicial question).

Occupy should definitely turn its attention to the CFPB. Very good idea. They, Occupy, will write a letter true to style (SEC) that cannot be ignored and that will serve to preempt the CFPB from turning itself on its head to please special interests. I would suggest that Occupy point out that we are citizens first and consumers only when we choose to be. I like to think of Occupy as the preventative medicine and the CFPB as fragile and vulnerable to disease.

I wonder how it would react to suggestions from an Occupy group, say an Occupy the CFPB that could match the caliber of work done by Occupy the SEC.

Seems to me that counts as a Community Organization, but I realize it’s not that simple and that a CO has a legal definition. Perhaps you need bite the bullet and play the bureacracy game a bit and do what it takes to become a Community Organization, which at the very least involves being a registered non-profit. http://en.wikipedia.org/wiki/Community-based_organization

I realize that may not be a strategy that all the Occupy people would be willing to undertake, as it involves working inside the system that is disapproved of. But it might be worthwhile for Occupy to exist in different forms both outside and inside the system. That way Occupy will know what’s going on in the negotiations – spies are useful!

Dear Valissa;
I’m of two minds about yous proposal.
The very ‘non official’ nature of the #Occupy movement is its greatest strength. The degree of cynicism and disgust with which the general public, (at least here in the Deep South,) views anything even remotely associated with “Officialdom” is overwhelming. I shall posit that the present political class has lost the trust and support of the general public. Only those percieved as ‘outsiders’ can whip up any support right now. Just look at how well the ‘Outsider’ candidates for president are doing in the preliminaries to the November vote. Yes, the ‘contenders’ in November will be the elites running dogs, but the glimpses of popular rage that the so called ‘fringe’ candidates are exposing do not bode well for the status quo.
Yes, it’s good to have spies in the ‘enemy’ camp, but also of great utility is that no one know who those spies are. #Occupy operatives would be sitting ducks for misinformation campaigns. The #Occupy folks are doing well enough where they are. Let them stick to what they are good at. Someone else will do the skullduggery.

There are levels of spying and front groups are often used. Naturally the infiltrating kinds of spies (into other groups) would have to be secret.

Honestly I am not personally involved with Occupy so I have no idea what the best path is for them. However, I have been attempting to learn how money & power operate, and it is based on that, that I offered my suggestion. One of my basic criticisms of liberalism is naivete and inexperience/denial of the importance of playing the power and money game (somehow being above all that, not willing to get hands dirty, etc). Certainly labor groups back in the early twentieth century understood the importance of playing the power game, that’s why they formed unions.

Community Organizations have a good public reputation, and CO’s don’t have to be political or support particular candidates. Of course if an Occupy group formed a CO they would also have to have in mind some way to serve their community, which could build some good will which would then improve their cred.

Mr. Strether;
We just got back from Baton Rouge, so please excuse the lag in reply to your querry.
A caveat: I am one person drawing information from a limited circle of lower middle and lower (read working) class people. One good technique used is to throw out a ‘progressive’ opinion on some topic and sit back and evaluate the response. Another basic technique is good old fashioned eavesdropping.
Yes, from here on the ground, COs do indeed have a good reputation. Consider that a large chunk of Deep South COs are what the Bushites euphemistically referred to as “faith based.” By and large, these groups function efficiently and do very little overt demonising. The smaller and more ‘honest’ faith based groups consist of people who actually live down in the trenches as it were. This is the often overlooked dimension of ‘faith based’ movements; they believe in what they are doing, and much of it revolves around a belief in helping the poor and less fortunate. A good example would be the Underground Railroad movement of the mid 1800s. Whenever demonizing elements intrude into these movements, it can usually be traced back to some outside interest group.
Most of the other COs are similarly held in good regard. One tell is the general upsurge in disgust and ‘righteous anger’ when a CO is caught doing something that would usually lead to a raise and promotion in a financial institution. The only class of CO held in disrepute I could find were those allied closely to City Hall or the County Court House. All politics is indeed local in these matters.
Other observations and feed back will be warmly recieved.

One more observation. Saw Michael Hudson’s new interview on Max Keiser. Prof. Hudson made an interesting clarification: Looking at Greece he sees a country that failed to create the laws and regulations necessary to prevent financiers from carpetbagging the whole country. If Greece had not nationalized their utilities they would have regulated them as private concerns. If these same utilities had already been operating as private concerns they could not have been repossessed from the taxpayer by bondholders. They could have filed for bankruptcy and recovered. So regulation is a good thing. For everyone except a dubious debt collector. And if dubious debt collectors were also turned into regulated utilities, as Yves once suggested, that might even solve that problem. Can the CFPB entertain an idea that big?

I hadn’t gotten very far into this piece when I read Liz Warren’s belief that simplifying credit forms would be a win-win – benefiting applicants by making their commitments more understandable, and benefiting creditors by reducing costs. Damned near wet myself. I know you know this Yves, but complexity always, always, always benefits the sophisticate at the rube’s expense. Those 30 page forms are filled with “party of the first part” gotchas, fees and interest penalties that no mere mortal could comprehend. Hence, credit application complexity is not a “bug”, its a “feature.” I don’t believe Liz is naive about this either. I think she was laying a rhetorical trap in which if the banksters chose to object, their motivations would become obvious and public opinion could then be marshaled against them. At the risk of pissing NC readers off I want to shout AMERICAN BORROWERS ARE THE BIGGEST RUBES ON THE PLANET. There’s your American Exceptionalism for ya.

Seems to me that letting the public comment freely from the net is only a good thing, not a bad. Yes lobbyists are part of the public. But that’s always been true. The general public are likeliest to seek access to government via the internet, not the crony lobbyist chummy with the receptionists on the Hill and in the agencies who already has all their names, phone and fax numbers. As a non-lobbyist member of that little guy general public, I can testify that I submitted a letter to the DOJ recently and actually got a callback from an attorney on it. How great is that?